Bank of America reported an increase in its earnings in the third quarter, beating analysts expectations despite the drop in mortgage banking income.
The bank’s total revenue increased 10% from last year’s nearly $8 billion to $8.8 billion in the third quarter. This is an increase of 3% from $8.5 billion in the second quarter.
Net income also showed significant yearly growth with an increase of 15% from $1.8 billion to $2.1 billion in the third quarter. This is an increase of just under 3% from the second quarter’s $2 billion.
Diluted earnings per share increased 17% from $0.41 last year and 4% from $0.46 in the second quarter to $0.48 per share in the third quarter.
This beat out the earnings per share consensus of $0.46 per share this quarter, according to Zacks Investment Research, which is based on nine analysts’ forecasts.
“Our focus on responsible growth and improving the way we serve customers and clients produced another quarter of strong results,” Bank of America CEO Brian Moynihan said. “Revenue across our four lines of business grew 4%, even with a challenging comparable quarter for trading.”
“We delivered positive operating leverage year over year for the 11th consecutive quarter while continuing to invest in improved capabilities,” Moynihan said. “Digital activity with customers continues to shape the way we provide products and services to customers, with the most recent example being Zelle, our new person-to-person payment capability.”
However, mortgage banking income decreased for the third consecutive quarter. Noninterest income decreased $756 million or 7% in the third quarter to $10.7 billion, driven primarily by a decrease in mortgage banking income.
The bank explained mortgage banking income was negatively impacted by less favorable valuations on mortgage servicing rights, net of related hedges and a $100 million increase in representations and warranties provision.
But Bank of America isn’t the only big bank struggling with mortgage income this quarter. JPMorgan Chase, Wells Fargo and Citigroup all posted a loss in mortgage banking for the third quarter.
